Quote:
Originally Posted by Kevy Baby
The 50% vs 25% doesn't mean too much in and of itself as gasoline is only one part of a barrel of oil.
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The 2nd part of your analysis is right, but this part is not, just to be pedantic. If pay $180 for a barrel of oil and use, say, 70% of that barrel to make gasoline, than I paid $126 for the portion of oil used for gasoline. If I then buy the next barrel at $90 and use the same amount of oil, then I've paid $63 for that portion of oil. That does indeed scale.
But you are correct that just because raw material costs drop doesn't mean overall production costs drop in proportion.